Consumer prices increased 0.38% over the previous month in June, swinging from May's 0.93% drop. The bounce back in price pressures was primarily driven by rising prices for food and non-alcoholic beverages. In addition, price pressures for housing and furnishings dropped at a more moderate pace.
Inflation dropped to 1.2% in June, following May’s 2.4%. June's result represented the weakest inflation rate since March. Meanwhile, the trend pointed up, with the annual average variation of consumer prices coming in at 0.2% in June (May: -0.1%). Meanwhile, core inflation was stable at May's 0.5% in June.
Regarding the outlook for inflation, Krystal Tan and Sanjay Mathur, economists at ANZ, commented:
“Looking ahead, inflation readings are likely to rise again as utility bills normalise. To recap, the government cut electricity and water charges for households and small businesses from May to June as part of its support measures in response to a third virus wave. […] However, demand-side price pressures will remain capped by a slow economic recovery. Notably, Covid-19 restrictions have recently been tightened again amid another spike in virus infections, which have in turn renewed downward pressure on economic activity.”
FocusEconomics Consensus Forecast panelists see inflation returning in 2021, with consumer prices rising 1.1%, which is up 0.1 percentage points from last month’s forecast, while in 2022 panelists predict average inflation of 1.1%.